💡 Summary #
Every funding decision at Factor & Fund goes through a structured risk assessment process to protect both your business and ours.
We don’t just fund fast – we fund safely. Our review ensures that every deal is legitimate, verifiable, and compliant.
⚙️ Purpose of the Risk Assessment #
Factoring isn’t just about your company — it’s also about who owes you money.
Since repayment comes from your buyer (debtor), we analyze both sides to confirm reliability and transparency before releasing funds.
🧩 Step-by-Step Risk Evaluation Framework #
1. Entity & Legal Verification (Client) #
We verify your company’s identity and structure using:
- W9, Articles of Incorporation, and EIN
- Secretary of State business registration
- Bank account title matching your entity
- Authorized signer verification
🟦 Goal: Confirm your business is legitimate and in good standing.
2. Contract & Transaction Validation #
We ensure your invoices represent real, completed work with valid purchase orders or signed contracts.
This step checks:
- Proof of delivery or service
- Clear payment terms
- Buyer acceptance or acknowledgment
- No duplicate or disputed invoices
3. Financial Review #
We examine your last 3+ months of business bank statements to evaluate:
- Source and consistency of deposits
- Business-to-business activity vs. personal spending
- Overdrafts or irregular transfers
- Financial stability and transaction patterns
💡 Healthy financial flow = faster funding approval.
4. Buyer (Debtor) Verification #
We perform a complete check on your buyer, including:
- Legal registration and payment history
- Verification of buyer contact and AP department
- Public reputation (Google, BBB, Glassdoor, Yelp)
- Confirmation of prior paid invoices (if available)
✅ Funding depends on the debtor’s strength — not just the client’s.
5. Online Reputation & Background Check #
We review public records and litigation databases for:
- Active lawsuits, bankruptcy filings, or liens
- Fraud reports or unresolved complaints
- Consistency between online presence and submitted details
6. Fund Flow Control #
We ensure Factor & Fund maintains direct control over all invoice payments, eliminating third-party interference.
Payments flow directly to our secured account, protecting every transaction.
7. Risk Classification #
After analysis, we assign each deal a category:
| Risk Level | Profile | Funding Terms |
|---|---|---|
| Low | Established business + verified buyer | Standard rates, max advance |
| Medium | New or limited buyer history | Moderate advance, tighter terms |
| High | Weak buyer or missing proof | Funding paused until resolved |
8. Final Decision #
Each deal is marked Approved, Declined, or Needs More Info.
Approvals include a full record of verified documents and internal compliance notes.
✅ Why This Matters #
- Prevents fraud and chargebacks
- Protects your reputation and business integrity
- Keeps funding lines compliant under DFPI and UCC rules
- Builds trust with high-value buyers
❓ FAQ #
Does this slow down my funding?
No. The full risk review is typically completed within 24 hours, thanks to our automated checks and verification tools.
Will I see my risk rating?
Yes. Your account representative can explain your classification and how to move to a lower-risk tier for better rates.
Do you run credit checks on my business?
Only if necessary — most of our assessment focuses on your buyers, not your personal or business credit.
